1

EXECUTIVE
SUMMARY

An internship program is very crucial & essential for acquiring experience

through learning and extending the scope of Knowledge. I have done my
internship program in S.k Finance ltd..

This internship report is aimed at providing a comprehensive picture to the areas

of loans and advances management of S.k Finance ltd.. The report has been
divided into different parts. These are: Introduction, Overview of S.k Finance ltd.
(S.K Ltd.), Internship role and experience, Loans & Advances, Analysis, Findings,
Recommendation, and References & Bibliography. S.k Finance ltd. is one of the
largest commercial Bank of India. The main objective of the Bank is to provide all
of banking services at the doorsteps of the people. The Bank also participates in
various social and development programs and takes part in implementation of
various policies and promises made by the Government and India Bank.

S.k Finance ltd. plays a pioneering role in handling loans and advances
transactions. This Bank tries to provide higher quality services in case of
sanctioning the loans and advances. The information of the report has collected
from secondary sources like books, published reports, annual report 2017 and
website of the S.k Finance ltd.. It includes source of existing/published data, such
as Operational manual, official website, Banking journals, Research papers and
financial statement. After analyzing data, it was found that customers have chosen
S.k Finance ltd. for its goodwill as private commercial bank. But the loan
sanctioning procedure is time consuming. That’s why bank is losing its valuable
customers in loan and advance department. Therefore, S.k Finance ltd. should give
more effort to make well establish market in the context of India and be more
flexible to disburse loan & advance.
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I also mention the findings of my report and describe the recommendation to

overcome the limitation.

I have taken all the reasonable care to ensure the accuracy and quality to make the
report standard. And I believe that it has included all the necessary information to
be relevant.
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TABLE OF CONTENT

CHAPTERS PARTICULARS PAGE NO

Letter of Transmittal
Approval Certificate

Acknowledgement

Executive Summary
Chapter -1 INTRODUCTION

1.1 Introduction 8

1.2 Background of the study 9

1.3 Scope of the Study 9

1.4 Objectives of the study 9

1.5 Methodology of the study 9

1.6 Limitation of the study 10

1.7 Background of S.K Ltd. 11

1.8 Management hierarchy of 12

Jaipurbranch of S.K Ltd.

Chapter-2 INTERNSHIP ROLE AND

EXPERIENCE
2.1 Accounts Department 13

2.2 Customer service department 13

2.3 Cash Department 16

2.4 Clearing department 17

2.5 Loan and advance Department 18

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2.6 Critical observations 19

2.7 Rational of the Study 20

Chapter-3 LOANS AND ADVANCE

MANAGEMENT
3.1 Loans & Advances (Credit) 21
3.2 Loans & Advance Policy guideline 21
3.3 Loans & Advance risk assessment 22
3.4 Credit risk grading 24
3.5 Loan & advance approval process 26
3.6 Basis of loans and advances 29
3.7 Risk management of loans & 30

advances
3.8 loan & advance recovery 32
3.9.1 ANALYSIS OF LOAN AND 33

ADVANCE
3.9.2. Findings 36

Chapter-4 SOWT ANALYSIS

4.1 Strengths 4.2 weakness’ 38

4.3 Opportunities 4.4 Threats

Chapter-5 Recommendations and conclusion
5.1 Recommendations 40
5.2 Conclusion, 5.3 Reference & 41

Bibliography
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CHAPTER – ONE

1.1 Introduction

Banking sector of the world contributed in the present global economy. To

establish a strong banking sector, it is required to have good study in banking
operations. Today’s Economic policy is concerned to obtain the optimum
economic condition in a country’s economy. Banking sector and banking activity
are playing a vital and important role to achieve that optimum goal of the
economy. The successful running of banking business depends upon effective
banks. As a commercial bank S.K Ltd. has a huge responsibility to ensure efficient
and effective banking operation all over the India in a sound manner with the other
banks as a competitor.

Banking sector is indispensable in a modern age and modern society. It always

plays a vital role to the economic development of the country. In modern age of
science and technology the banking sector all over the world has been undergoing
a lot of change due to deregulation, technological invention and globalization. But
India banking sector is lagging to keep pace with the other countries it adapts the
changes. Basically banks take deposit from the customers against some interest
payment and lend the money to the borrowers with a different interest rate and
time period. To ensure the safety of the depositor’s fund there are various types of
credit facility. Also bank must hold adequate fund to meet the daily needs of the
clients.
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Loan and advance management a branch of accountancy, and is a function that

falls under the label of “Credit and Collection’ or ‘Accounts Receivable’ as a
department in many companies and institutions. They will usually deal with the
credit vetting of customers, the resolution of any invoice queries or disputes,
allocations of payments or cash application, internal fund movements,
reconciliations and also maintaining positive working relationships with customer
during the debt collection or credit review and approval process.

The Importance of Credit Management. One of the most, if not the most, important
activities in your company is credit management. Loan and advance management
the process to ensure that customers will pay for the products delivered or the
services rendered.
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1.2 Background of the Study

The internship program is mandatory requirement for the students who are
graduating from the Faculty of Business Administration under the program
Bachelor of Business Administration of Chittagong University.

Internship program is designed to put them in a challenging environment of the

relevant field, where the students get sample opportunity to apply their theoretical
knowledge into practical applications. During the internship training, students
have the opportunity to adopt themselves into the particular environment of the
organization. It provides a unique opportunity to see the reality of business during
student life, which enables them to building confidence and working knowledge
in advance of the start of their career.

1.3 Scope of the Study

National bank is one of the top private commercial banks in India containing 205
branches over the country. The scope of the study is limited to the Jaipurbranch
only. The report includes general banking, credit operation, foreign exchange
related operation, and others ancillary services rendered and the performance of
the branch as well as the bank.

1.4 Objectives of the

Study Broad Objective

⮚ The main objective is to gain practical knowledge about

commercial banking practices.
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Secondary/Specific Objectives:
⮚ To know general banking practices (daily activities and
services) offered by S.k Finance ltd..
⮚ To know loans and advances, loan sanctioning process, loan
operations management and the problems related to loans
and advances operations of S.k Finance ltd..
⮚ To make some recommendations to solve the problems /
remedial measures of the development of National Bank Ltd.

1.5 Methodology of the Study

Information is a critical element of any research, on which the outcome depends.

To complete this report, the information was collected from primary and
secondary data source.

The study inputs were collected from two sources:

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(a) Primary Sources:

1. Most of the information was acquired by discussing with the

officers working in the JaipurBranch, S.k Finance ltd..
2. For information relating to customer relationship level, interviews and
discussion sessions were conducted with related departments of the bank
to gather basic information related to the products and a market overview
from National Bank’s perspective.
3. Observation and work experience with different divisional in-charges
and suggestions of many executives of the bank.
(b) Secondary Sources:

1. Annual Reports 2017 and financial statement 2018 of National Bank

Memos & circulars various books, articles, compilations etc. Of the
branch.
2. The organization booklets of charges and fees, application forms and
suggestions from the

customer’s feedback from customer relation unit.

3. Different circulars sent by Head office of National Bank.

4. Daily diary (containing my activities of practical orientation in) maintained

by me,

5. Various publications on bank, Newspapers and magazines

regarding market and customer views on S.K Ltd., seminar papers
and so on.
6. India Bank and National Bank websites.

1.6 Limitations of the Study

The study is conducted with an objective to make a thorough study of loans &
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advances management that have been availed many facilities and faced some
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obstacles during my study. These obstacles may be termed as limitation of the

study. These limitations are as follows:

▪ Learning all the banking function within one month was really
difficult (limitation of time)

▪ The information acquired for the study was not adequate.

▪ Most of the time S.K Ltd.’s employee was very busy. So they can’t provide
enough time to get

information for preparing this report.

▪ Confidential documents or objects to the firm were not available to access.

▪ As the internship is the first practical experience, it is not possible to

know everything about the bank.
▪ S.k Finance ltd. did not give me any kind of monetary support for this
internship program.
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1.7 Background of S.K Ltd.

S.k Finance ltd. is known for its successful past, superb present, imminent
future and under handling ventures and exercises. National Bank was born as the
first hundred percent Indiai owned Bank in the private sector. From the very
inception, it was the firm determination of S.k Finance ltd. playing a vital role in
the national economy. To keep pace with time and harmony with national and
international economic activities and for rendering all modern services.

The emergence of S.k Finance ltd. in the private sector was an important
event in the Banking area of India. When the nation was in the grip of severe
recession, the government took the farsighted decision to allow the private sector
to revive the economy of the country. Several dynamic entrepreneurs came
forward for establishing a bank with a motto to revitalize the economy of the
country.

The than president of the people Republic of India justice Ahsanuddin

Chowdhury inaugurated the bank formally on March 28, 1983 , but the first branch
at 48 Dilkusha commercial area , Dhaka started commercial operation on March
23, 1983. The 2nd branch was opened on 11th May 1983 at khatungonj, Chittagong.

At present, S.K Ltd. has been carrying on business through its 205 branches
& Agri Branches spread all over the country. It has drawing arrangements with
415 correspondents in 75 countries of the world, as well as with 37 overseas
Exchange Companies located in 13 countries. S.K Ltd. was the first domestic bank
to establish agency arrangements with the world famous Western Union in order to
facilitate quick and safe remittance of the valuable foreign exchanges earned by the
expatriate Indiai nationals.
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S.K Ltd. was also the first among domestic banks to introduce international
Master Card in India. In the meantime, S.K Ltd. has also introduced the Visa Card
andPowerCard.TheBankhasinitsusethelatestinformationtechnologyservices
of SWIFT and REUTERS. S.K Ltd. has been continuing its small credit program
for disbursement of collateral free agricultural loans among the poor farmers of
Barindra area in Rajshahi district for improving their livelihood. S.K Ltd. focused
on all key areas covering capital adequacy, maintaining good asset quality, sound
management, satisfactory earnings, and liquidity.
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1.8 Organization Hierarchy of JaipurBranch

Any organization is operated by maintaining the principle of hierarchy to

maintain the operation of the organization. This will ensure the easy execution of
the operation by the employees of the organization. The JaipurBranch of S.k
Finance ltd. has the following hierarchy
Assistant Vice
President Trainee
Assistant officer Assi
(Branch Manager) stant
offic
er

Principal officer
(Operational First executive Suffort Staffs(peons)
Manager) officer

Senior executive officer Executive officer

Figure # Organization structure of Jaipurbranch

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CHAPTER-TWO

I have completed my internship program in S.k Finance ltd., Jaipurbranch. I got

the opportunity to work in different department of the branch. I found myself very
lucky to associate with one of the renowned banks in India. Throughout my
internship program, I was assigned under EMRAN MAHMOOD, SAVP & Head
of Branch. I worked with MS. MIFTAHUL JANNAT, SPO, (loan and advance
department) and MR. MURIDUL ALAM, FEO, (General banking department)
JaipurBranch. It was a very pleasant and educative experience for me. I learned a
lot of new things about corporate life. Most importantly, I have learned how to
perform banking activities on time responsively. This practical experience is
crucial for the preparation for oneself before entering into corporate world.

2.1 Accounts Department:

As an intern, at first I was assigned in the accounts department. There, I was given
some responsibilities which are given below:
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Account opening: I was given the task to open the accounts of different
customers. Firstly, I checked that whether the customer brought the necessary
documents for opening the account. There are some necessary documents which
are mandatory for opening an account in a bank. They are: National ID card, 2
copy passport size photo of the account opener, 1 copy of passport size photo of
the nominee of that account. The customer also need an introducer who has already
an account in the bank. Then the introducer and customer will sign the 2 copies of
photo of the customer. Then customer and the nominee need to sign the photo of
the nominee. In case of opening the accounts which are related to business like CD
(Current Deposit) account, the customer need to bring “Trade License”, “TIN (Tax
Identification Number) Certificate. If all the documents prove to be correct, then I
completed the forms and passed it to my supervisor.

Correction of account opening form:

Sometime customers make error in filling account opening form. Correction of
uncompleted form which was detected by the internal audits. Like there were
some forms which were filling up without putting account number, title number,
nature of the organization the clients work in. Some forms were kept without
proper address, TIN papers, National ID card number. My job was to complete
those form.
Filling up Know Your Customer (KYC) form for personal and corporate risk
rating. My job was to find out risk level and risk rating of personal and corporate
by considering TP form for the purpose of measuring of overall risk assessment

2.2 Customer service department:

1. Providing information about products:

I provided product related information to the customers.

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National bank Products & Services

Deposits Product

⮚ Saving Deposit
⮚ Current Deposit
⮚ Term Deposit
⮚ Foreign Currency Deposit
⮚ Monthly Saving Scheme
⮚ Monthly Income Scheme
⮚ Double Benefit Scheme
⮚ Millionaire Income Scheme
⮚ Schooling banking
⮚ Krisok banking
⮚ Shadinota Scheme

S.K Ltd. has different deposit schemes all around its branches in India. Except
that two common types of deposit items Saving Deposit and Current
Deposit, they have 6 distinctive deposit items.

Brief Explanation on Deposit

1. Term Deposit
Under this Term deposit there are two deposit schemes available.

✔ Special Notice Deposit and

Fixed Deposit Special Notice Deposit

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It is a special account based on the savings of any account holder. They offer
different interest toward their customers, minimum maintenance charge on
this deposit scheme is half yearly BDT 500.

Fixed Deposit

The bank need not maintain cash reserves against these deposits and therefore, the
bank offers higher of interest on such deposits. In the case of FDR, it is clearly
mention that when this amount will be withdrawed account holder receive
principle amount plus interest. FDR slip contains name of account holder,
deposited amount, and interest rate, and time of maturity. Duration of FRD is
maximum 1year and auto-renewal also maximum interest rate 12.50%.

Monthly Income Scheme (MIS)

MIS A/C the period of this deposit will be 3 years, deposit amount Tk. 1,00,000
and also multiple up to any amount that will be acceptable under the scheme. The
depositor must maintain a savings A/C with
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any branch of S.K Ltd.. Interest rate of this deposit scheme about 10.00% without
TIN certificate and with TIN (Tax Identification Certificate) 15.00%

Double Benefit Scheme (DBS)

DBS A/C the period of this deposit will be 6 years or it could be extended, but this
account could be open from Tk. 50,000 up to any acceptable amount, this account
opened either singly or jointly but it has some other terms and conditions.

Millionaire Deposit Scheme (MDS)

MDS A/C the period of this deposit divided into 3 years, duration 5 years, 7years
and 10 years. According to the deposit duration there are 3types of installments
Tk.12, 450 (5years), Tk.7, 870 (7years) and Tk.4, 550 (10years) but the maturity or
terminal value will be same as others Tk.10, 00,000

Credit Products

⮚ Overdraft
⮚ Lease Financing
⮚ House Building
⮚ SME & Women Entrepreneurs Financing
⮚ Retail & Consumer Credit Scheme
⮚ Trade Finance
⮚ Micro credit Agri Financing
⮚ Financing RMG

1. Security Overdraft: Short form Security Overdraft is SOD, there are

two types of SOD one is General (it against V.O, capital or working
capital) and another one is Export (payment of acceptance bills at
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receipt
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of export proceeds). Others conditions are applicable to all the account

holders, like FDR A/C holders get 11.00%to12.00% interest and NMS
A/C holders get 15.00% interest in SOD.

2. Cash Credit: this type of loan allocated upon their customer needs

(such loans are given on shop stock, home purpose etc.) maximum 10
lac and interest also higher about 18.00%.

3. Any Purpose Loan: Interest rate 18.00% and limitation on such loan

about 2lac (it is actually based on the branch manager designation and
fixed by the head office) in S.K Ltd. head office it’s up to 5lac.

4. Consumer Durable Loan: Maximum 1 lac limitation and its given to

the customers who wants to buy Tele Vision, refrigerator etc.

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5. Education Loan: Maximum 5lac and it is only available for FDR

A/C holders.

6. Professional Loan: All different professional account holders can have

such loan not

7. SME Loan: S.K Ltd. Small Business Loan, Festival Small

Business Loan, S.K Ltd. Weavers Loan, S.K Ltd. Nari Jagoron
Loan
8. Retail Loan: Any Purpose Loan, Consumer Durable Loan, Education Loan

Cards Products

⮚ Credit Card
⮚ Debit Card
⮚ Visa Card
⮚ Master card

2. Calling customers:

I did phone calls for collecting necessary photographs photocopy of National ID

cards or any other requires. Sometimes I made phone calls to the customers who
did not collect their cheque books after passing 2-3 months. When they come in
bank to receive cheque book, I distribute the desired cheque books by asking them
their name, account number and then verify them. I used to do cheque book
entries on register books and then keep the cheque books at safe place serially.

2.3 Cash Department:

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In cash department, I was given the responsibility to check whether the customer
has filled up the check accordingly. Then I matched the customer’s sign given in
the cheque with the sign that is stored in the bank’s computer. I also checked
whether it is “Order cheque” or “Cross Cheque”. If it was an order cheque, then the
bank will give the money to the specific person. The person’s name will be in the
cheque. If it was a cross cheque, then the bank will give the money to none and
will transfer the money to a specific account. No one has the power to cash that
cheque. After that, if all the requirements are fulfilled, then I passed the cheques to
my supervisor. Then, the officers are assigned in the cash department would give
the money to the customers.
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2.4 Clearing department:

Clearing is a management by which a bank can collect customers fund from one
bank to another through clearing house. Cheque, Pay Order (P.O), Demand Draft
(D.D.) Collection of amount of other banks on behalf of its customer are a basic
function of a Clearing Department.

There are two kinds of Clearing

Outward clearing:
The A/c holders of our Branch deposit other Bank’s instrument in their A/c for
collection. We collect it
through Outward Clearing and credit the proceeds in their A/c.

Inward Clearing:

The A/c Holder of our Branch gives our Branch’s instrument to their party who is
not our A/c holder as payment. The party deposits the following instruments in
their A/c for Collection through clearing house. We receive those instruments from
Clearing house and make payment on behalf of our A/c holder.

There are two type of clearing house:

1. Normal clearing house (low value) 2. Same day clearing house (high value).

• Precaution at the time of cheque receiving for Clearing, Collection of LBC,

OBC & Transfer:

1. Name of the account holder same in the cheque & deposit slip.

2. Date in cheque may be on or before (but not more than six months back)
clearing house date.
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3. Cheque must be signed.

4. Signature for confirmation of date, amount in words / in figure Cutting &

Mutilation of cheque.

5. Cheque should be crossed (not for bearer cheque).

6. Account number in the deposit slip must be clear.

7. Depositor’s signature in the deposit slip.

The tasks I performed in this department are given below:

1. Checking cheque holder name, name of bank, name of branch, amount of

money in figure and amount weather similar or not.

2. Scanning cheque for authorization.

3. Cheque setting according to date and storing in file.

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2.5 Loan and advance Department:

Loan plays an important role in earning profit for a bank. If a person wants to take
loan from a bank, he needs to submit some necessary documents which are: trade
license, TIN certificate, bank statement, bank solvency certificate, property
valuation certificate, stock report, national ID card etc. I was given the
responsibility to check the necessary documents & to observe the process of
sanctioning loans and advance.

My duties were in this department:

⮚ Filling form of loan application.

⮚ Writing various document enclosed loan application.

⮚ Directly interaction with borrower and loan officers to know

their demand of loan, their relationship with bank, their loan
payment management, loan approving process and recovery
process.

If all the documents are ok, then I passed it to my supervisor. Almost 25 days i
interned in loan and advance department.

Others activity: Sometime I was given the record of the daily transactions such
as deposit, cash in hand, Bills payables (Pay-orders, Demand Draft), Remittances
etcetera in a register book to observe and submit them to my supervisor at the
ending time of office hours. In the Jaipurbranch of National Bank, all the
transaction of transfers is recorded in computer and then they are checked whether
the Debit and Credit side are same or not. I was given the task to do that. I used to
record the transfer transactions and checked whether the both side are same or
not.
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I recorded salaries of all officers and employees to the register of salary in the
month of June, 2019, for the first time.
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2.6 Critical observations:

During the period of my internship program, I collected and studied various

information on various aspect of S.K Ltd.. On the basis of these information my
critical observations of Jaipurbranch of S.K Ltd. are given below:

(i) Customers are forbidden from all types of retail banking products
and services which are available and easily accessible in all the
major branches of S.K Ltd..
(ii) Few SME, RETAIL banking in this branch and no
foreign exchange department and LC facilities.
(iii) Limited human recourses that create workload upon
employees and making the customers as painful heavy pylon.
(iv) Offered different schemes are not properly designed that would
attract the new customers; especially there is no such scheme that
encourage to the student or young people to open any bank
account.
(v) Mostly they are detached from the marketing and promotional activity
which is their biggest disadvantage that could be harder to sustain their
business in highly competitive market.
(vi) From the observation of various deposit account I find that the
amount as well as the number of accounts is increasing day by day.

(vii) Salary is not better than others banks and structure of salary
improperly constructed.
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(viii) We can see the performance of monthly savings scheme is very good
than other deposit accounts. Other accounts like savings & short term
deposit accounts are also appreciated.
(ix) The loan provided by the Jaipurbranch is significantly increasing from
last six months but the rate of increase is not sufficient. The authority
should give more concern to increase the bank loan.
(x) Customers think that the bank should provide online services,
establish more ATM booths, reduce the processing time of
application regarding various types of accounts, increase the
money limit on credit card, reduce service charge etc.
(xi) Customers suggest that the bank should give more emphasize on these
matters like provide education loan, micro credit loans, reduce the
amount of securities against loans, the rate of interest should decrease
etc.
(xii) The document study on deposit & loan account also shows that the
customers of Jaipurbranch of S.K Ltd. is satisfied with the bank
services but they want some improvement in the sectors of retail
banking. If S.K Ltd. can improve its service level than the bank
can earn more profit & more customers’ satisfaction as new
innovative products (already tested in other markets) can be
brought to India.
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2.7 Rational of the study

Sound loan and advance management is the pre-condition for a commercial bank
to achieve its goals and profitability. A banks performance depends on its efficient
loan and advance management. Banks allowed loan and advances to borrower at
an interest rate which is the most common and major income source for the banks.
So it proper loan and advance management is a critical issues of a bank. A banks
loan and advance management consist a number of efficient staff, a sound
guideline of managing credit, documentation, borrower & others stakeholders.
Banks generally provide short term to medium term loan to the borrower. And
most of the loan amount starts from 10 lac to cores. Maximum loans are business
loan, SME loan and there also personal loan & home loan for the customers
provided by Jaipurbranch of S.K Ltd.. I choose the loan and advance management
of Jaipurbranch of S.K Ltd. as my critical study in the following chapter to give the
answer of following question:
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1. What are the credits products of Jaipurbranch of S.K Ltd. offer to customers?

2. Which products are the most popular among all?

3. What are the borrower types and their relationship with bank?

4. What are demand of loans and their loan payment management?

5. What are the procedure of loan approving process and risk assessment and
risk grading?

6. Which are the problems faces in times of disbursement & recovery of credit?

7. How they manage and monitor the total procedure?

8. What is the current situation of non-performing loan?

9. What is the current investment and analysis of types of loan of the

Jaipurbranch of S.K Ltd.?

10. What is the current interest income of Jaipurbranch of S.K Ltd.?

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CHAPTER – THREE

3.1 Loans & Advances (credit)

In banking terminology, credit refers to the loans and advances made by the bank
to its customers or borrowers. Bank credit is a credit by which a person who has
given the required security to a bank has liberty to draw to a certain extent agreed
upon. It is an arrangement for deferred payment of a loan or purchase. Credit
means a provision of, or commitment to provide, funds or substitutes for funds, to
a borrower, including off-balance sheet transactions, customers’ lines of credit,
overdrafts, bills purchased and discounted, and finance leases.

3.2 Loans & Advance policy guideline

Following are the loans & advances policy guidelines of national bank:

1. Credit principles
2. Loan & advance disbursement policy
3. Credit Portfolio mix
4. Products and services of S.K Ltd.
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Credit principles

Some specific credit principles of S.K Ltd.:

● Credit shall focus on the development and advancement of

customer relationship.
● All credit extension must comply with the requirements of Banking
Company’s Act, India Bank’s instructions, other rules and regulation
as amended from time to time.
● Loans and advance shall normally be financed from customer’s deposit and
not out of temporary
funds or borrowing from other banks.

● It should be to those customers who can make the best use of them.
● Evaluate borrower's nature for reliability and keenness to pay
● Evaluate borrower's loan settlement capability.
● Develop action plans for the likelihood of non-payment.
● Extension of credit in satisfactorily controllable risk areas.
● Be proactive in recognizing, administering and conveying credit risk.
● Try to achieve an acceptable equilibrium between risk and reward.
● Construct and sustain a diversified credit portfolio

Principles of loans & advance disbursement

S.K Ltd. follows the following seven principles in case of loan & advance
disbursement activity:

1. Safety
2. Security.
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3. Liquidity.
4. Adequate yield.
5. Diversity.
6. Productive purpose.
7. National interest.

3.3 Loans & Advance Risk Assessment

Before extension of loans, a comprehensive credit risk appraisal is done and

annual reviews are made. A credit memorandum (CM) is prepared by the
Relationship Manager (RM) which includes the findings of such assessment.
The RM used to be the owner of the customer relationship and he / she is held
responsible for complying with all the policies and guidelines of India bank,
bank laws, S.K Ltd. policies and guidelines etc.

Two ways to assess credit risk:

(i) Call report

(ii) Credit Memorandum

Call report

At the time inception of a relationship, the relationship manager tries to gather

more and more information about the client. He / she sometimes visit the business
premises to get an idea about the financial and operational condition of the
prospective client. The market reputation, competitive position etc. are also duly
assessed. Branch manager along with the relationship manager is also connected
in this process. These initial visits or enquiries are referred to as 'calls'. Based on
the findings of such calls, RM and the branch manager send a call report to the
Head
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of Marketing, Head of Credit and Managing Director for initial review. The call
report contains some basic information about the client such as:

I. Client's background
II. Business
III. Market share
IV. Reliability
V. Credit exposure
VI. Existing banking relationships
VII. Credit requirements
VIII. Pricing of the proposed credit facility

Credit Memorandum (CM)

If the Head Office conveys positive sign for a call report, then only the branch RM
goes for preparing a CM. The preparation of CM includes the in-depth analysis of
credit risk factors, critical assessment of the client in the light of credit policy
guidelines of the bank. Then it is sent to the Head of Marketing to enclose the
necessary recommendations and to commence the credit approval process. The
CM has to be accompanied with all the required legal documents and the financial
information of the prospective client.

The CM generally contains the followings:

(a) A specific control number and base number for each client.
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(b) The credit risk grading score.

(c) The authorization for the approval process.
(d) The description of the proposed facility.
(e) Rationale behind the loan extension.
(f) Financial information of the client mainly the income statements for
the past years, earnings forecasts in normal and adverse conditions.
(g) Forecasted earnings from the relationship to be established.

(h) Lending agreement.

(i) Compliance of the policies and guidelines of India Bank and S.K Ltd..

The CM also contains the assessment of the following areas:

✔ Borrower analysis

The majority shareholders, management team and group or affiliate companies are
assessed. Any issues regarding lack of management depth, complicated ownership
structures or intergroup transactions are addressed, and risks mitigated.

✔ Industry Analysis

The key risk factors of the borrower’s industry are assessed. Any issues regarding
the borrower’s position in the industry, overall industry concerns or competitive
forces are addressed and the strengths and weaknesses of the borrower relative to
its competition are identified.

✔ Supplier/Buyer Analysis

Any customer or supplier concentration is addressed, as these could have a

significant impact on the future viability of the borrower.
 37

✔ Historical Financial Analysis

An analysis of a minimum of 3 year historical financial statements of the

borrower is presented. Where reliance is placed on a corporate guarantor,
guarantor financial statements are also analyzed. The analysis addresses the
quality and sustainability of earnings, cash flow and the strength of the borrower’s
balance sheet.
Specifically, cash flow, leverage and profitability are analyzed.

✔ Projected Financial Performance

Where term facilities (tenor > 1 year) are being proposed, a projection of the
borrower’s future financial performance is provided, indicating an analysis of the
sufficiency of cash flow to service debt repayments. Loans are not granted if
projected cash flow is insufficient to repay debts.

✔ Account Conduct

For existing borrowers, the historic performances in meeting repayment

obligations (trade payments, cheques, interest and principal payments, etc.) are
assessed.

✔ Adherence to Lending Guidelines

Credit Applications should clearly state whether or not the proposed application is
in compliance with the bank’s Lending Guidelines. The Bank’s Head of Credit or
Managing Director/CEO approve Credit Memorandum that does not adhere to the
bank’s Lending Guidelines.

✔ Mitigating Factors
 38

Mitigating factors for risks identified in the credit assessment are identified.
Possible risks include, but are not limited to: margin sustainability and/or volatility,
high debt load (leverage/gearing), overstocking or debtor issues; rapid growth,
acquisition or expansion; new business line/product expansion; management
changes or succession issues; customer or supplier concentrations; and lack of
transparency or industry issues.

✔ Loan Structure

The amounts and tenors of financing proposed are justified based on the projected
repayment ability and loan purpose. Excessive tenor or amount relative to business
needs increases the risk of fund diversion and may adversely impact the
borrower’s repayment ability.

✔ Security

A current valuation of collateral is obtained and the quality and priority of

security being proposed are assessed. Loans are not granted based solely on
security.
Adequacy and the extent of the insurance coverage are also assessed.

3.4 Credit Risk Grading

Credit Risk Grading is an important tool for giving loans & advances as it helps a
Bank to understand various dimensions of risk involved in different credit
transactions. According to India Bank guidelines, all Banks should adopt a credit
risk grading management. The credit risk grading management is vital to take
decisions both at the pre-sanction stage as well as post-sanction stage. At the pre-
sanction stage, credit grading helps the sanctioning authority to decide whether to
lend or not to lend, what should be the pricing for a particular exposure, what
should be the extent of exposure, what should be the appropriate credit facility and
 39

the various risk mitigation tools. At the post-sanction stage, the bank can decide
 40

about the depth of the review or renewal, frequency of review, periodicity of the
grading, and other precautions to be taken. The Credit Risk Grading (CRG) is a
collective definition based on the pre-specified scale and reflects the underlying
credit-risk for a given exposure.

S.K Ltd. applies the following credit risk grading matrix as provided by India
Bank guidelines:

Risk Rating Grade Definitio

n

Superior – Facilities are fully secured by cash deposits,

Low Risk 1 government bonds or a counter guarantee from a
top tier international bank. All security
documentation should be in place
Good – The repayment capacity of the borrower is strong.
Satisfactory The borrower should have excellent liquidity and
2
Risk low leverage. The company should demonstrate
consistently strong earnings and cash flow and
have an uS.K Ltd.emished track record. All
security documentation should be in place.
Aggregate Score of 95 or
greater based on the Risk Grade Scorecard.
 41

Acceptable – Adequate financial condition though may not be

Fair Risk 3 able to sustain any major or continued setbacks.
These borrowers are not as strong as Grade 2
borrowers, but should still demonstrate consistent
earnings, cash flow and have a good track record.
A borrower should not be graded better than 3 if
realistic audited financial statements are not
received. These assets would normally be secured
by acceptable collateral (1st charge over stocks /
debtors / equipment / property). Borrowers should
have adequate liquidity, cash flow and earnings.
An Aggregate Score of
75-94 based on the Risk Grade Scorecard
Marginal - Grade 4 assets warrant greater attention due to
Watch list 4 conditions affecting the borrower, the industry or
the economic environment. These borrowers have
an above average risk due to strained liquidity,
higher than normal leverage, thin cash flow and/or
inconsistent earnings. Facilities should be
downgraded to 4 if the borrower incurs a loss,
loan payments routinely fall past due, account
conduct is poor, or other untoward factors are
present. An Aggregate Score of 65-74 based on
the Risk Grade
Scorecard.
 42

Special Mention Grade 5 assets have potential weaknesses

5 that deserve
management’s close attention. Facilities should be
downgraded
to 5 if sustained deterioration in financial

Substandard Financial condition is weak and capacity or

6 inclination to repay is in doubt. Loans should be

downgraded to 6 if loan payments remain past due
for 60-90 days, if the customer intends to create a
lender group for debt restructuring purposes, the
operation has ceased trading or any indication
suggesting the winding up or closure of the
borrower is discovered. An Aggregate Score of
45-
54 based on the Risk Grade Scorecard.
 43

Doubtful and Full repayment of principal and interest is unlikely

Bad 7 and the possibility of loss is extremely high.

(nonperforming) However, due to specifically identifiable pending

factors, such as litigation, liquidation procedures or
capital injection, the asset is not yet classified as
Loss. Assets should be downgraded to 7 if loan
payments remain past due in excess of 90 days, and
interest income should be taken into suspense
(nonaccrual). Loan loss provisions must be raised
against the estimated unrealizable amount of all
facilities. The adequacy of provisions must be
reviewed at least quarterly on all non-performing
loans, and the bank should pursue legal options to
enforce security to obtain repayment or negotiate
an appropriate loan rescheduling. In all cases, the
 44

requirements of India Bank in CIB reporting, loan

rescheduling and provisioning must be followed.
An Aggregate Score of 35-44 based
on the Risk Grade Scorecard

Loss Assets graded 8 are long outstanding with no

(nonperforming) 8 progress in obtaining repayment (in excess of 180
days past due) or in the late
stages of wind up/liquidation. The prospect of

recovery is poor
 45

and legal options have been pursued. The proceeds

expected from the liquidation or realization of
security may be awaited. The continuance of the
loan as a bankable asset is not warranted, and the
anticipated loss should have been provided for.
India Bank guidelines for timely write off of bad
loans must be adhered to. An Aggregate Score of
35 or less based on the Risk Grade
Scorecard

3.5 Loans & advance approval process

In approval process the Bank segregates its relationship Management / Marketing

from the approving authority. The existing approval authorities are Head of
Branch (wherever applicable) and Head Office Credit Committee, Executive
Committee of Directors and Board of Directors. The Bank Management/ Board of
Directors of the Bank is actively considering for the Individual Delegation Power
to the Senior Level Executives at Head Office instead of Head Office Credit
Committee for effective credit risk management.

No credit facility may be approved unless a satisfactory presentation package has

been prepared. Prior to securing the requisite approval, the authority ensures due
diligence that:

⮚ The Bank is in possession of all credit information required to

properly evaluate the risk being undertaken.
⮚ A detailed credit analysis has been completed, to include a
written analysis of the financial condition of the borrower.
 46

⮚ The proposed extension of credit fully meets the standard of purpose, quality
etc.
⮚ The Board of Investment Registration, permission for all regulatory
bodies, clean CIB reports etc. are obtained.

All the facilities offered by the branch must be approved from the Head of
Credit Committee. A flow chart of approval process of loan is given below:
 47

Flow Chart of Approval process

BRANCH MARKETING TEAM

(EbbgEgCbbTb & OFFICERS)

HEAD OF BRANCH BOARD OF DIRECTORS
(APPROVAL/DECLINE) (APPROVAL/DECLINE)

BEYOND CAPACITY
RECOMMENDED TO
BEYOND
CAPACITY
RECOMMENDED
TO

HEAD OF
CORPORATE/COMMERCIAL
EXECUTIVE COMMITTEE OF
DIRECTORS
(APPROVAL/DECLINE)
FORWARDED TO

BEYOND
HEAD OF CREDIT
CAPACITY
(APPROVAL/ DECLINE)
RECOMMENDE
D TO

BEYOND CAPACITY
RECOMMENDED TO
MD
(APPROVAL/DECLINE)

DMD(APPRO

VAL/DECLINE)
BEYOND
CAPACITY
RECOMMEND
ED TO
48
 49

Appeal Process

Any declined credit may be represented to the next higher authority for
reassessment/approval. However, there should be no appeal process beyond the
President & Managing Director.

Time requirement

At Branch level: Branch Authority must take decision within maximum of 1-3 days
at Head Office level: The Head Office Credit Committee/EC/Board should take
decision within maximum of:

❖ 3-5 days for simple type of facility.

❖ 7-15 days for Project Loan.
❖ 15-30 days for loans under Syndication.

Sanction letter – on approval, the sanction letter to be issued within 1-2 days’ time.
In case of large loan, it must be reported to India Bank. In case of other specific
loans like Director’s loan, prior approval from India Bank to be obtained as per the
requirements/ guidelines of India Bank.

Sanction Advice

After the facility has been approved, the credit officers of the branch prepare a
sanction advice which is addressed to the client. It is a kind of formal letter
addressed to the client that provides information regarding the amount of the loan,
its purpose, tenor, interest, security details, insurance coverage and other specific
and general conditions applicable to the client.

A sanction advice contains the following information:

a. Address of the client

b. Subject
c. Facility type
d. Review / repayment date
 50

e. Security details
f. Insurance coverage
g. Specific conditions
h. General conditions
i. Other conditions and covenants

A sanction advice is accompanied with the necessary legal documents. These

documents may include:

a. Demand promissory note

b. Letter of agreement
c. Letter of continuity
d. Letter of revival
e. Letter of disbursement
f. Letter of hypothecation with supplementary documents
g. Registered deed of mortgage
h. Letter of guarantee
i. Registered power of attorney etc.
 51

3.6 Basis of Loans and advances

I. Lien

II. Mortgage

LIEN

Lien is permitted against the Following

● DPS= Deposit Pension Scheme
● FDR= Fixed Deposit Receipt
● PSE= Protirakha Sanchoy Patra

Lien (VALUE) must be higher than the value of Loans. 80% of Lien documents
(VALUE) is permitted for the Loans & Advances. The position of Lien Documents
must be under the hand of Bank. Here, Interest Rate of Loans: 14%

Mortgage

❖ Land
❖ Building
❖ Shop

Mortgage value must be higher than the value of Loans. 50% of Mortgage
Documents (value) is permitted for the Loans & Advances. The position of
Mortgage Documents need not to be under the hand of Bank only legal papers are
necessary to be under the hand of Bank. Here, Interest Rate of Loans: 13%.

To get Loans & Advance for the individual client against DPS (Deposit
Pension Scheme), FDR (Fixed Deposit Receipt), MBDR (Monthly Benefit
Deposit Receipt), DBDR (Double Benefit Deposit Receipt), PSP (Protirakha
Sanchoy Patra) etc in favor 3rd party the papers followings are needed.

To get Loans & Advance for the individual client against DPS (Deposit
Pension Scheme), FDR (Fixed Deposit Receipt), MBDR (Monthly Benefit
Deposit Receipt),
 52

DBDR (Double Benefit Deposit Receipt), PSP (Protirakha Sanchoy Patra) etc in
favor 3rd party the papers followings are needed

I. Letter of Agreement
II. Letter of Authority
III. Demand Promissory Note
IV. Balance Confirmation Slip
V. Letter of Lien and authority for advances of third party’s against Fixed
Deposits/ Call Deposits/
Special Deposits or Margin Deposits

VI. Letter of Continuity

VII. Memorandum of Deposit of Securities
 53

3.7 Risk management of loans & advances

The credit risk management process of S.K Ltd. has the function of consistent
monitoring of the transactions within approved limits and recovering the bank's dues
in time.

The credit risk management process of S.K Ltd. includes the following operations:

✔ Loan Administration

✔ Credit Monitoring

Loan Administration

The main responsibilities performed by the loan administration department are as

follows:

(a) To ensure that all security documentation complies with the terms of approval
and is enforceable.
(b) To monitor insurance coverage to ensure appropriate coverage is in
place over assets pledged as collateral, and is properly assigned to the
bank.
(c) To control loan disbursements only after all terms and conditions
of approval have been met, and all security documentation is in
place.
(d) To maintain control over all security documentation.
(e) To monitor borrower’s compliance with covenants and agreed terms
and conditions, and
general monitoring of account conduct/performance.

Documentation: Credit administration department ensures the following in

connection with documentation:

o All approvals and documents are in place.

 54

o Documents are prepared in accordance with the approved terms and

 55

conditions and are legally enforceable

o Vetting of required documents is done.
o Protection of the bank's security interest.
o Any exception from the standard loan facility is duly authorized from the
Head of Credit.

Disbursement: The loan administration department performs the following

responsibilities in connection with the disbursement to ensure that:

❖ All standard security and charge documents are in place.

❖ Documentation check list has been prepared.
❖ Credit administration department has duly authorized the disbursement.
❖ Disbursement authorization form is documented as an evidence of document.
❖ A proper back up of all the documents is maintained in the
computer management.
❖ Incomplete documentation has received temporary waiver from the authority.
❖ Pricing of the facility is appropriate.
❖ All disbursements / drawings are in the form of approved credit facility.
❖ Excess over limit are allowed under pre-fact approval.
❖ A clean updated CIB report is obtained before disbursement.
❖ The lending cap of the bank is duly maintained.
 56

Credit Monitoring

To minimize credit losses, monitoring procedures and managements are in place

that provides an early indication of the deteriorating financial health of a borrower.
Credit monitoring process at S.K Ltd. tries to monitor the following:

❖ Past due principal or interest payments, past due trade bills, account
excesses, and breach of loan covenants
❖ Loan terms and conditions are monitored, financial statements are
received on a regular basis, and any covenant breaches or exceptions are
referred to CRM and the RM team for timely follow- up.
❖ Timely corrective action is taken to address findings of any internal,
external or regulator inspection/audit.

Branch Monitoring

Credit monitoring activities in the branch performs the following responsibility:

❖ Monitor transactions in accounts to ensure turnover and utilization of limits.

❖ Thoroughly review all past dues, collateral short fall, covenant breach and
other irregularities.
❖ Rectify all audit objections and follow their suggestions.
❖ Periodic client calls and review by branch head.
❖ Formal periodic review of all relationships.
❖ Factory visit / stock inspection and progress of work against work
/ implementation of projects are to be recorded and reviewed.
❖ Borrower to be communicated about past dues, overdue
installments, expiry of insurance, guarantee, limits etc.
❖ Early alert reports are prepared within 7 days of identification of weakness
in the business and financial weakness of the client and sent to Head
Office Loan Administration.
 57

3.8 Loans & advances recovery

The loan & advance division performs the following recovery related functions:

o Directly managing accounts with sustained deterioration (a risk rating of

sub- standard or worse)
o Determining work out plan / Recovery strategy.
o Pursuing all avenues to maximize recovery, including placing
customers into receivership or liquidation as appropriate.
o Ensuring adequate and timely loan loss provisions are made based
on actual and expected losses.
o Keeping top management appraised of grade 6 or worse accounts.
o

National Bank Ltd follows some recovery steps:

Days Past Due (DPD) Collection Action

1-14 Letter, Follow up &
Persuasion over phone

(Annexure V)
15-29 1st Reminder letter & Sl. No. 1 follows
30-44 2nd reminder letter + Single visit
45-59 3rd reminder letter (Annexure VI)
Group visit by team member
Follow up over phone

Letters to Guarantor, Employer,

Reference all above effort
follo
ws
 58

Warning on legal action by next 15 days

60-89 Call up loan (Annexure VII)

Final Reminder & Serve
legal notice legal
proceedings begin
Repossession starts
Telephone calls/Legal proceedings
continue Collection effort continues by
officer & agent Letter to different
banks/Association
 59

3.9.1 ANALYSIS OF LOANS & ADVANCES JaipurBRANCH, CHITTAGONG

Loan Products and services of S.K Ltd. of Jaipurbranch.

i. General purpose
Secured Overdraft (SOD)
ii. 100% cash covered
iii. 12 months period
Overdraft (OD) i. General purpose

ii. 12 months period

Time loan i. Against security or collateral
ii. To finance inventory/

receivables/ 12 months

Term loan i. Against fixed assets

ii. Over 12 months

iii. Maximum 7 years
Letter of Guarantee i. For contractual obligations

Big client of JaipurBranch for loans & advances

Client Name TK limit

JaipurIron Mart 5 crore
Monsur & Brothers 2.5 crore
Altaz Marketing Company 1.10 crore
Al. Emran & Brothers 1.10 crore
Altaz trading 1 crore
A.R. Trading 6 crore
Daridro Mukthi 1 lac
Source: From principal officer, Jaipurbranch
 60

Jaipurbranch, Chittagong, of S.K Ltd. earns higher income from Mansur &
brothers, Altaz trading, & Altaz marketing company.

The sanction power of branch manager for loans & advances up to tk 100,000. All
the loans & advances are sanctioned from head office.
 61

Glance of loans, classified loans, recovery, total deposits, & profit of

Jaipurbranch (2013-2018 aug)

Year Total Total loans Recovery Classified Profit (TK)

deposits & advances amount loan
(TK) (TK) ( TK) s
(T
K
)
2013 81,87,00,00 19,71,71,00 1,93,000 26,97,000 3,67,00,000
recovery classif ied loan
0 Deposits 0
Lo ans & Advances profi
t
2014 9,51,1000 13,31,00,00 2,69,000 26,97,000 3,20,00,000

0
2015 99,66,00,00 11,73,00,00 2,7,00,000 1,38,21,000 3,3,00,000

0 0
2016 102,000,000 13,60,00,00 15,00,000 2,68,00,000 1,47,00,000

0
2017 119,11,00,0 7,58,00,000 1,32,42,000 1,38,00,000 1,47,00,000

00
132,3240,104 8,16,02 5800200 16 1,362,00107,0 99,0200 1,08
2018 2013
0,0 0 1 5
0 , 000 00 00
(Jan
00
-

Aug)
Source: Financial highlight of Jaipurbranch (2013-2018)
62
 117

268000
13

8160
13

147000
102

7580

138000
147000

136000
138210

132420

990000
951
36700

330000
269700

269000
269700
32000

270000

150000
193000

58000
63

From above table & graph it is concluded that Jaipurbranch collected more
deposits at last six years. In 2014 it was fall down. After next year the rate of
deposit is higher than previous year. The amount of
 64

recovery of Jaipurbranch was very narrow. The amount of disbursement loan was
decreased at last six years. Every year classified loan was a big amount than
recovery amount. The earing profit of the branch was slightly well.

Product portfolio mix of Muradour branch in 2018 (Jan- Aug)

Products Loans & advances(TK)

Continuous loan 4,89,60,000 60%
Secured over draft 7,60,000 0.93%
SME loan 24,00,000 2.94%
Agri loan 20,00,000 2.46%
Any purpose 1,22,90,000 15.06%
Daridro mukthi 4,00,000 .49%
Novo udhog 3,90,000 .47%
House building 91,80,000 11.25%
Car loan 8,70,000 1.07%
Credit card 3,00,000 .37%
Woman Entrepreneur 40,50,000 4.96%
Total 8,16,00,000 100%
Source: Financial highlight of Jaipurbranch

Jaipurbranch disbursed highest amount of loan in continuous loan sector (60%).

SME (2.94), Agri (2.46), any purpose (15.06), woman entrepreneur (4.96%) are
also significant sector for disbursement of loan of Jaipurbranch, Chittagong.
 65

Product portfolio mix of Muradour branch in 2018 (Jan- Aug)

PRODUCT
HOUSE CAR CREDIT CARD
PORTFOLIO MIX

11% 2% 0% WOMAN
5%
CUSTOME
R LOAN
NOVO UDHUG

0% SOD
DARIDRO MUKTI
S
ME
1% AGRI

OTHERS
SME
DARIDRO
MUKTI
3%
NOVO
UDHUG

HOUSE
OTHERS AGRISOD CONTINUOUS
15%
2% 1% 60% CAR
 66

Loans & Advances to total assets ratio of JaipurBranch:

Year Credit (TK) Total Assets (TK) (Credit/Tota

l assets )
*100
2013 19,71,71,000 97,21,82,000 20.28%
2014 13,13,00,000 100,10,20,000 13.17%
2015 11,73,00,000 98,50,05,000 11.91%
2016 13,60,00,000 105,47,16,000 12.90%
2017 7,58,00,000 122,15,10,000 6.21%
2018 ( Jan- Aug) 8,16,00,000 136,10,30,000 5.995%
Source: From Senior executive officer, JaipurBranch

From Above table, the asses of credit exposure of Jaipurbranch to total assets was
20.28% in 2013. But from the year 2014 it was fall down to 13.17%. This rate
was also decreased to 11.91%, 12.90%, 6.21%, and 5.995% in 2014, 2015, 2016,
2017,
and 2018 respectively.

3.9.2 Findings and data interpretation:

From the aforesaid study a number of findings can be disclosed. In this chapter
major findings are being stated and in the immediate next section all the possible
solutions of negative findings will be recommended.

The amount of deposit and loans & advances have been increasing notably from
 67

2013 to 2017. But the growth rate of loans & advances is so much than the growth
 68

rate of deposit. In 2017, S.K Ltd. disbursed higher loan (28.93%) in medium
enterprise sector than other sectors. In 2017, S.K Ltd. disbursed only 1.41% loan
in agriculture sector which is too lower. But agriculture sector is the crucial sector
for our economy. Limited authority of branch manager in case of sanctioning loans
(up to one lac). Loans and advances are not widely disbursed. The credit risk
management of S.k Finance ltd. is quite commendable. Systematic and timely
monitoring and appropriate documentation are tried to be maintained. Credit
quality depends on close follow-up and monitoring of loans. The follow-up and
monitoring of loans is strong here.

Others findings:

❖ There is a visible shortage in work force of General Banking

department. Consequently, the workload is extremely high

compared to other branches, as this is the Corporate Branch. This
also leads to accumulation of work that the employees must
complete within the deadline.
 69

❖ S.K Ltd. provides wide ranging facilities to its employees to develop

their skills and knowledge about the entire banking management.

However, with the existing workforce shortage, an employee is sent
to training without any replacement. This increases the work
pressures for other employees and lads to customer disappointment
due to delay of work.

❖ Sometimes due to poor internet server, employees cannot tell the

customers their required amount of balance in their account. This

also leads to customer dissatisfaction.
❖ There is lack of promotional strategies undertaken by S.K Ltd.. This

causes substantial unfamiliarity of the bank among the rural people.

It may hinder its long term strategies in terms of reaching large
number of customers.
 70

Chapter – 4

SWOT Analysis

The bank’s strength and competitive capabilities can be shown by the SWOT
analysis. The SWOT analysis is grounded in the basic principle that strategy
making efforts must aim at producing a good fit between a company’s
resource capability and its external situation. The SWOT analysis is as
follows:

4.1 Strengths:

⮚ The banks have provided services successfully and have

achieved goodwill in all over the country.
⮚ National bank has sponsors from various section of India. The most
successful entrepreneurs from various sections started this company.
As a result, there was a combination of different thoughts and skills
in the management of the bank, which is very much essential for
success in today’s competitive market.
⮚ Bank has a very competent and experienced top Management.
⮚ Branches: National bank is operating their business all over the
country with branches. It
has strengthened the distribution of the bank’s services.
 71

4.2 Weaknesses:

⮚ The bank does not have any formal promotional activity. They do not
give any sort of advertisement or do not have any marketing activity.
They do not even too many bill boards.
⮚ No foreign exchange department is available in this branch.
⮚ A few SME loan is provided.
⮚ No marriage loan (CONSUMER loan), Transportation loan (CAR loan)
is provided from this branch.
⮚ The remuneration of the officers of National bank is lower compared to
other banks. Even the internship students are paid nothing. This is way
high skilled human resources are discouraged to join here.
⮚ The decision making of the bank is too many centralized. No decision is
made without the authorization of the head office.
 72

4.3 Opportunities:

⮚ National bank is operating corporate banking. In our country there is a

huge opportunity of consumer banking. So National bank can reposition
their branding and introduce consumer banking with corporate banking.
⮚ Motor parts business is the highest investment sector of the Jaipurbranch.
⮚ The banking sector of the country is becoming modernized in the country.
People like to draw money anytime from anywhere. So ATM card is getting
popularized in the country. National bank can introduce ATM management
in their bank.
⮚ The intention of the people has been changing. They now want to save
more. They also want some benefit on their saving. So National bank
can introduce more products and schemes.
⮚ Set up more correspondent relationship and branch network in potential areas.

⮚ Foreign Exchange Business can be increased to a great extent.

⮚ Financing the most prospective garments sector in India.
⮚ Financing poor stated industries which could have bright prospects.
⮚ Emergence of E-banking will open more scope for S.K Ltd. to reach
the clients desire level of satisfaction not only in India but also
global arena.
 73

4.4 Threats

⮚ In India, after economic reform, more private bank has started their
operation in the country. They are coming with different types of
attracting products. This has increased the completion among the
banks.
⮚ The value of local currency is decreasing. So investment in banking is
decreasing. Moreover, the inflation is increasing in the country. So
people want to save money but in many cases they cannot. As a result,
the banks are getting less deposit.
⮚ There is a tendency of the people of the country to become bankrupt.
Few days ago Sonali bank, Janata bank, Basic bank, primer bank,
etc. have a great suffering. This is discouraging banks to make new
investment.
 74

Chapter-5

Recommendations:

Banking is a service –oriented marketing, the business profit depends on its

service quality. That is why the authority always should be aware about their
service.

Some recommendations regarding bank’s betterment are described below. The

recommendations given below are not decisions; rather they are only suggestions
to improve the performance in order to fulfill the customer satisfaction so that
clients give more preference to S.k Finance ltd.. The recommendations are made
on the basis of findings and analysis and these are:

1. Jaipurbranch should take necessary steps to increase its deposit amount

and open a foreign exchange department.
2. Jaipurbranch can increase profitability by providing more loan in SME
and Retail sectors. So it should be increased. S.K Ltd. should increase the
disbursement of loan and advance in agriculture sector
3. The bank should adopt a credit grading management. All facilities should
be assigned a risk grade.

And the borrowers’ risk grades should be clearly stated on credit application

4. The responsibilities of the key persons of the above function must also be
clearly specified

5. Bank should make proper and exhaustive documentation before

disbursement and to ensure proper supervision, monitoring and follow up
of each credit.
6. Selection of borrower shall be made as per rules and procedures of the
advances and after making proper assessment of business
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establishment,
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respectability, creditability, actual requirement of fund repayment capacity

etc.
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5.1 Conclusion:

Banking sector of India consists of several nationalized and private banks. They
are doing their activities and highly contribute to the national economy. Among
them S.K Ltd. Bank Limited also makes significant contribution to the economy.
They are performing their activities, as a result not only the bank but also the
economy is benefited. The bank is performing general banking, Loan-advance,
foreign exchange activities etc. As a result, they are mobilizing the money and do
well for the economy.
Although they have some limitations in their services, they are doing tremendous
job for the economy. If they can reduce their limitation and introduce new ideas,
they can do better in the banking sector of India.

A banker cannot sleep well with bad debts in his portfolio. The failure of
commercial banks occurs mainly due to bad loans, which occurs due to inefficient
management of the loans and advances portfolio. Therefore, any banks must be
extremely cautious about its lending portfolio and credit policy. So far S.k Finance
ltd. has been able to manage its credit portfolio skillfully and kept the classified
loan at a very lower rate.

From the discussion in this report, it has become clear that loans & advances
management is a complex and ongoing process and therefore financial institutions
must take a serious approach in addressing these issues. They have to be up to
date in complying with all the required procedures and must employ competent
people who have the ability to deal with these complex matters.
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5.2 References & bibliography:

1) Annual Report 2017

2) Credit Risk Grading Manual.

3) www.S.K Ltd.bd.com

4) S.K Ltd.’s retail banking service prospectus.

5) Credit Policy and risk management guide of National Bank Ltd.

6) Articles published on Credit Department information of S.K Ltd..

7) Theory & Practice of Banking, India Institute of Bank Management (BIBM)

8) Circulars published by India Bank.

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SUMMER TRAINING PROJECT EVALUATION FORM

Name of Student Karan Gonla

Institute Roll No 41

Session 2023 - 2025

Name of Organization S.K Finance Ltd.

Address Duration of Training Period from _15.07.2024 to 01.09.2024

No. of Working Days 45

1) How do you rate the overall training programme as an educational experience?

Excellent (yes) Very good ( ) Good ( ) Fair ( ) Poor ( )

2) To what extent will it help you in future?

To large extent (yes )

To some extent ( )

Negligible extent ( )

3) Indicate subject/ area to which training was found relevant.

Practical Learning and Corporate practices for sales strategies

4) Indicate the level of interest taken by the training

organization High ( ) Moderate (yes ) Low ( )

5) Any other comments/ suggestions

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No

Dated : 01.09.2024

Karan Gonla

FEED BACK FORM

1. Name of the Industry :

2. Concerned Group : Sales

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3. Turn Over (in terms of Capital) : (in terms of Product)

4. Work Force : 500+

5. Description of Product Range:

6. Description of Process:

7. Area of Training:

8. Contact details of the Person responsible for Summer Training Project:

a. Name of contact person:

b. Designation:

c. Communication address:

d. Phone No. with STD code:

e. Mobile No. :

f. Email Address:

Name of the student : Karan Gonla

Institute Roll No: 41

Class: MBA ( Semester – 3 )

Phone : Mobile No. : 8471862179

Email: [email protected]

Dated : 1.09.2024

Karan Gonla
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